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Chapter 12 - DMO Program 1.2 Management of Capability Sustainment

The objective for DMO Program 1.2 is to sustain the ADF and its capabilities. Each financial year, the DMO enters into an agency-level bilateral materiel sustainment agreement with each Defence capability manager. The agreement details the level of performance and support required, within an agreed price, as well as key performance indicators for which service delivery will be measured.

The program supported around 116 products for Defence, which ranged from high-grade specialised military platforms-such as the C-17 Globemaster III heavy airlift aircraft, the Super Hornet multi-role F/A-18 aircraft, Anzac class frigates and Seahawk helicopters-to clearance diving systems and patrol boats, as well as commodity-type items such as rifles and ADF clothing.

Support to ADF operations is the highest priority for the DMO. Significant effort is put into ensuring that our forces are effectively deployed and maintained. This task includes ensuring that these forces are supported from the outset, through training and exercise regimes to well-serviced and maintained platforms, and are equipped with both the supplies and support needed to do the job. This outcome is only achieved through planning and implementing efficient procurement activities and maintenance programs.

Program 1.2 represented around 55 per cent of the DMO's expenses in 2012- 13.

Table 12.4 -DMO Program 1.2 deliverables

Table 12.4 - DMO Program 1.2 deliverables
Deliverables for top 20 DMO sustainment products under management in Program 1.2 Performance information
Aerospace Systems
Aerospace Systems Division provides through-life support to 13 aircraft types including: F/A-18 Classic Hornet and Super Hornet, Airborne Early Warning & Control (AEW&C), AP-3C Orion, C-17A Globemaster, KC-30A (Multi-Role Tanker/Transport), C-130J and PC9. Aerospace Systems Division also supports a number of advanced flight simulators and ground support equipment fleets. Achievements
  • Implemented efficiency initiatives, including incentive-based support contracts
  • Managed the Classic Hornet ageing aircraft issues to maintain the capability until at least 2022
  • Supported operationally deployed weapon systems such as the C-17A, C-130J and the AP-3C
  • Continued to finalise in-service support arrangements for KC-30A and AEW&C aircraft
  • Developed of acquisition and sustainment strategies for future aerospace projects
  • Provided support to emergent operational capabilities such as the Heron Unmanned Aerial System
  • Replaced the ageing Aircraft Cargo Loader fleet
  • Established a performance-based contract for aviation technical training
Airborne Early Warning and Control System (CAF20)

The system comprises six aircraft, fixed and deployable mission support systems, flight deck and mission simulators, and two software laboratories.

The AEW&C sustainment matured to the level required to support initial operational capability. Key achievements included the first in-service software build, a substantial lay-in of spares, implementing improvements to the repair pipeline, and a maturing of the electronic warfare self protection and electronic support measures sustainment.

F/A-18 A/B Hornet Weapons System (CAF02)

Seventy-one aircraft and associated support systems are sustained through a combination of Defence and commercial support arrangements. Sustainment levels agreed with the Air Force were mostly met, or exceeded.

A Classic Hornet deeper maintenance contract was negotiated during the year and became operative in April 2013. This contract yields significant strategic reform savings and will provide Hornet deeper maintenance out to beyond 2020.

The physical inspection phase of the Hornet Ageing Aircraft Systems Audit has been completed. Review and implementation of associated recommendations are underway.

Performance against the Air Force requirements was substantially achieved.

F/A-18F Block II Super Hornet Weapons System (CAF21)

Twenty-four F/A-18F Block II Super Hornet aircraft were introduced into service between March 2010 to October 2011 on schedule and under budget and achieved full operational capability on 13 December 2012.

The sustainment systems for this fleet continue to mature as additional spares are delivered. Support arrangements will be reassessed in the coming year in view of the government decision to acquire 12 new-build Growler aircraft and retain Super Hornet aircraft after 2020.

P-3C/AP-3C Orion Weapons System (CAF04)

The P-3 Orion fleet of 18 aircraft and associated training facilities continue to progress through key systems upgrades to improve the major systems supportability and capability. The fleet requires significant management focus to address the increased costs and supportability issues associated with an ageing aircraft.

In November 2012, the P-3 Orion Middle East detachment and associated support equipment was withdrawn and repatriated after 10 years of continuous support to operations. This was a significant milestone in the history of the P-3 fleet. The first safety-by-inspection program is almost complete and several major support contracts were renegotiated to realise significant savings.

C-130J-30 Weapons System (CAF06)

Twelve C-130J aircraft currently provide air logistics support, airborne operations, aero-medical evacuation, search and survivor assistance, and training.

High mission success rates were achieved throughout 2012-13 despite the rate of effort flown slightly exceeding the plan. Contract negotiations for improved performance-based support arrangements for the AE2100 propulsion system are well advanced for implementation during quarter three, 2013.

The planned servicing schedule review was concluded in December 2012. The optimised maintenance program increases the interval between scheduled maintenance visits which in turn increases the availability of C-130J aircraft to support in-country and deployed operations. The fleet is transitioning to the new regime as aircraft fall due for their next maintenance.

Lead-in Fighter Hawk-127 Weapons System (CAF03)

The Hawk-127 aircraft fleet of 33 aircraft is used to train pilots for the F/A-18 Classic and Super Hornet and, in the future, the Joint Strike Fighter. The aircraft and training devices are sustained through a prime contract with BAE Systems Australia. This performance-based contract provides all in-service support other than operational maintenance, which is performed by the Air Force. The in-service support contract was successfully re-tendered and commenced on 1 July 2013.

Performance against the Air Force requirements was substantially achieved.

Electronic Systems
The sustainment of electronic systems was executed via 19 System Program and System Support Offices based on Materiel Sustainment Agreements with six Capability Managers. These offices covered command and control systems, communications, satellites and tactical interoperability, airspace surveillance and control systems, logistics information systems and electronic warfare systems.

Achievements

Communications

  • Analysed and planned the major fleet transition phase as the second tranche of JP 2072 (future Combat Net Radio) equipment is to be rolled out through 2013 to late 2014
  • Continued to participate in the successful Army Enhanced Equipment Pool initiative to maximise effective utilisation of tactical communications equipment
  • Continued progress of the long-term guy wire replacement program for Naval Communication Station Harold E Holt
  • Developed work packages under the Support Services Contract for the High Frequency Network to support obsolescence management including information technology refresh and cryptographic equipment update

Command support systems

  • Investigated options for the next generation deployable local area networks, which will leverage the opportunities afforded by technological advancement and improved hardware and software being developed by commercial sources

Electronic warfare

  • Managed sustainment of all ADF Large Aircraft Infrared Countermeasures Systems, covering multiple current and future airborne programs
  • Sustained the joint counter improvised explosive device capability
  • Provided in-service support for the Nulka anti-ship missile countermeasures
  • Sustained tactical airborne and land based systems

Surveillance and control

  • Redeveloped the Australian Defence Air Traffic System and Vigilare support contracts to provide more efficient and effective support and achieve reform savings
  • Provided support was to the Air Force to remediate priority issues at the Woomera Test Facility
  • Put in place revised arrangements for repair of Military Global Positioning Satellite Systems in Australian industry

Satellites and tactical interoperability

  • Continued sustainment activities in support of Defence's Fixed Satellite Communications Ground Infrastructure sites in Australia
  • Developed support concepts for narrowband satellite communications and project equipment provisioned under the Wideband Global Satellite Communications partnership with the United States
  • Established maintenance and supply support for fixed wideband satellite communication equipment
  • Identified further efficiencies and remediation of obsolescence issues affecting tactical satellite terminal equipment
  • Continued provision of engineering and technical support to the ADF's Tactical Information
Wide Area Surveillance Capability (CAF13) Wide area surveillance across the northern sea and air approaches to Australia is provided through a network of three over the horizon radars. Capability availability targets were met and consistently exceeded. Strategic Reform Program targets were achieved through multiple efficiency initiatives. Skills retention ensuring priority industry capability is being achieved through a program of work that supports industry capacity and delivers minor capability enhancements, risk reduction for Joint Project 2025 Phase 6, and remediation of urgent obsolescence and supportability issues. Substantial progress has been made in the upgrade of communication links used to connect the radars with the operations centre.
Helicopter Systems

Helicopter Systems Division provides through-life support to seven rotary wing weapons systems through System Program Offices based at Nowra, New South Wales for Navy Aviation, and Brisbane and Oakey, Queensland for Army Aviation. The offices provide fleet-wide engineering, repair parts, contract management for deeper level maintenance and replacement of ageing and obsolescent aircraft equipment for the ADF's helicopters with the exception of Tiger and MRH90. The main support functions for Tiger and MRH90 are contracted directly to industry and are managed from Brisbane. In addition, a combined project and sustainment team to manage the introduction and throughlife support of tactical Unmanned Aerial Vehicles works within the division from Brisbane.

The sustainment tasks are driven by operational unit requirements and deployments such as the Seahawk helicopters embarked in ships serving in the Middle East, the Chinooks and UAVs in Afghanistan, and Black Hawks in East Timor.

Achievements

  • Sustained the Black Hawk commitment in East Timor until it drew to a close in October 2012
  • Improved support for Tiger and MRH-90, in particular the significant contractual reforms negotiated with the prime contractor in support of the MRH-90
  • Provided an electro-optical device for Seahawk operations in the Middle East
  • Facilitated the homogenisation of the Squirrel fleet to include an instrument landing system in all aircraft.
Armed Reconnaissance Helicopter Weapons System (CA12) The fleet of 22 Tigers provides the Army's armed reconnaissance helicopter capability. Sustainment performance continues to improve, but more is required to meet the mature rate of effort requirement. While positive progress was made towards achieving the operationally deployable squadron milestone, the declaration of the milestone was affected by a temporary suspension of flying operations while an issue with fumes being detected in the cockpit was addressed; this issue will be rectified in 2013- 14.
Multi Role Helicopter (MRH) (CA48) The MRH- 90 flying rate of effort continued to slowly improve over the year enabling the program to move towards delivering an operational capability with greater surety and confidence. Sustainment activities will benefit from the negotiated settlement with the prime contractor achieved in May 2013 that will introduce an improved set of sustainment performance measures, greater intellectual property rights, a repair- bythe- hour pricing basis and better technical data access provisions.
S70A-9 Black Hawk Weapons System (CA11) The sustainment of the Army's fleet of 34 Black Hawks has been carefully managed to assure ongoing support to air, mobile and special operations capabilities. The continuing maturation of the MRH-90 capability has allowed planning for the drawdown of the Black Hawk fleet to progress with greater fidelity.
S-70B-2 Seahawk Weapons System (CN03) The fleet of 16 Seahawk helicopters contributes to Navy's anti-surface and antisubmarine warfare capabilities. The primary sustainment risks relating to mission system obsolescence were managed with minimal impact on operational outputs while drawdown planning continued ahead of the introduction of the MH-60R. Of note, during 2012-13 several Seahawks were fitted with high-definition electro-optical devices to enhance the Navy's surveillance and reconnaissance capability within the Middle East Area of Operations.
Land Systems
Land Systems Division sustains materiel across 27 product schedules that provide a diverse range of equipment for the ADF and manages over 230,000 lines of supply. Specific fleets include armoured and nonarmoured vehicles, engineer plant, artillery, weapons, soldier protection systems, uniforms, medical and dental stores, combat rations, surveillance and simulation systems.

Achievements

  • Completed a rotation of all protected mobility vehicles deployed in Afghanistan to improve force protection
  • Developed transition and remediation plans to support operational planning
  • Supported ongoing pre- deployment force preparation to deploying personnel
  • Conducted comprehensive equipment fleet performance reviews with the Army and transitioned to a modular agreements format
  • Completed equipment pool trials and now reviewing possible additional fleets for inclusion in pools
  • Extended servicing intervals on aircraft refuelling tankers as well as inspections/hydrostatic testing on fuel hoses to reduce sustainment costs
  • Completed a number of corporate inventory reform initiatives such as the accelerated disposals program and the rationalisation of warehousing
General Service B Vehicle Fleet (CA45)

Full support for operations continued to be provided, including procurement of deployable all-terrain vehicles and up armoured land-cruiser station wagons.

The age of the fleet continues to pose technical challenges with respect to the maintenance of required capability levels, particularly with certification and spare parts obsolescence. Careful management of critical variants was adopted, together with an endorsed strategy to manage the Land Rover fleet until withdrawal from service.

Fleet reduction is a priority, given the continuing roll-out of LAND 121 Phase 3A. During 2012-13, approximately 1,750 vehicles were removed from service, with a further 280 vehicles currently pending disposal.

ADF Clothing (CA39)

All requirements for a broad range of clothing and footwear were met in support of overseas operations and Raise, Train and Sustain activities in Australia.

The operational combat uniform worn by ADF personnel in Afghanistan is now being manufactured in Australia, with approximately 18,000 Australian-made garments delivered.

Long- term standing offers were signed with Australian industry for the supply of standard combat uniforms and accessories (Australian Defence Apparel and Pacific Brands Workwear Group) and slouch hats (Akubra and Mountcastle)

Maritime Systems

The Maritime Systems sustainment concept is to support maritime capability through cost effective materiel design, maintenance engineering and logistic support to platforms, equipment and systems. The provision of these sustainment services is under a structure of System Program Offices that are collocated regionally with the Navy Forces and groups by ship class, and that manage the delivery of services through a variety of outsourced commercial contracts.

  • Implementation of the Rizzo review recommendations has progressed an understanding of the broad framework of capability from a whole of life perspective. The DMO and the Navy have made significant efforts to integrate their relationship, evidenced by more robust supplier agreements. The Adelaide Class Ships Systems Program Office has implemented business improvements through a Rizzo Reform Business Change Activity that involved the establishment of collaborative planning processes, improved budgeting methods and reforms to address ageing platforms.
  • Activities under the Smart Sustainment strategic reform have established fundamental change and improvement in the maritime sustainment strategy for the majority of the Navy's inventory and will deliver significant benefits in the form of agile and product-accountable support. There have been improved efficiencies in the in-service support arrangements for the Coastal Mine Hunter program.
  • Work has continued on improving the management of maintenance and configuration baselines across major surface ships through improvements in the maintenance management tool, and the configuration management tool. The review and update of the maintenance and configuration management baselines continues for the high-priority systems in HMAS Success.
  • The group maintenance contract has been implemented for the Anzac class group, and has been released for tenders for the Adelaide class group.
  • Interim support and operations arrangements for the Captain Cook Graving Dock were established and will enable continued availability of the dock and services until a formal transition arrangement is finalised.
  • Ongoing support to HMAS Choules has included the resolution of major propulsion transformer defects, and the ongoing development of arrangements for effective long-term sustainability of HMAS Choules. Preparations for LHD sustainment continue with contracts for the various elements being progressed. Australian Defence Vessel Ocean Shield has been available for all Navy tasking.
Fuels and Lubricants-Navy, Army, Air Force (CN26, CA43, CAF18) Key activities included the continuing review of optimal fuel and packaged petroleum product holdings in consultation with the ADF Capability Managers; development toward the Defence adoption of the whole-of-government agreement for commercial fuel card services and the implementation of the inventory and financial accounting system.
Anzac class frigate (CN02) Key achievements include providing ongoing capability sustainment of eight Anzac class frigates to meet Navy' s operational requirements; and awarding the Anzac class group maintenance contract. A number of defects remain above target but are being steadily reduced. The second of the Anzac ships to enter the Anti Ship Missile Defence upgrade (SEA 1448 Phase 2) is on schedule to deliver in 2014.
Adelaide class frigate (CN01) Ongoing capability sustainment of four Adelaide class frigates was provided to meet the Navy's operational requirements. The request for tender under the group maintenance contract has been released. The Rizzo Reform Lifecycle Reference Model implementation has been progressed and improvements implemented in the areas of collaborative planning and improved lifecycle costing.
Auxiliary Oiler Replenishment (CN13) Maintenance of the Auxiliary Oiler Replenishment ship HMAS Success was achieved to support the Navy's fleet exercises and operations prior to entering a major refit in December 2012. The refit maintenance activity was affected by an unscheduled increase in maintenance requirements, which has extended the refit duration.
Mine Hunter Coastal (CN14) All materiel support and scheduled maintenance was completed. The designs for the upgrades of the ships fire-fighting and combat systems are ongoing.
Explosive Ordnance
Explosive Ordnance Division provides a dedicated focus to the management of explosive ordnance acquisition and sustainment outcomes. Guided Weapons Branch manages the acquisition and in-service support of all guided weapons. Munitions Branch manages the acquisition of and in-services support of all non-guided munitions, pyrotechnics and countermeasures for the Australian Defence Force.

Achievements

  • Released tender for Domestic Munitions Manufacturing Arrangements
  • Migrated significant portion of general stores inventory and repairable items from Computer Systems Armament to Military Integrated Logistic Information System
  • Established contract for replacement Harpoon missile test set
  • Established improved materiel sustainment agreements with Service customers
  • Progressed remediation of Harpoon missile inventory
  • Achieved significant progress towards full compliance with Comcare workplace health and safety enforceable undertaking for management of hazardous chemicals
  • Made significant progress in disposal of time-expired and obsolete explosive ordnance
  • Completed productivity and efficiency studies for the Navy's guided weapons maintenance
  • Progressed life extensions for specified guided weapons
Explosive Ordnance - Navy, Army, Air Force (CA59, CA60, CAF17, CN37, CN38)

Explosive Ordnance Division fully satisfied all of the Navy, Army and Air Force demands for guided and non-guided explosive ordnance for operations and training.

A substantial effort was directed to the continued replenishment of spares holdings for the Navy guided weapons and to a program of work to increase the availability of the Harpoon inventory. Resource considerations resulted in a reduction in the work output of the torpedo maintenance facility. Financial achievement was in line with the budget. Strategic Reform Program savings were achieved through improved contracting practices, life of type extensions where practical and process efficiencies.

Collins Submarine Management Program
Reforms to improve Collins class sustainment have been in progress since 2010. Coles Report recommendations, currently being implemented, compliment the ongoing reforms and establish a clear plan for restoring submarine availability to benchmark levels by 2016-17. (CN10)

  • Availability: 120 per cent of target
  • HMAS Sheean full cycle docking completed
  • HMAS Waller mid-cycle docking completed
  • HMAS Farncomb certification extension docking completed

Reforms implemented

  • Commenced transition towards a performance-based contract enacted with ASC Pty Ltd
  • Management responsibility for 96 per cent of inventory (by line item) transferred to industry
  • Increased engineering authority awarded to industry members operating within the Collins authorised engineering organisation
  • Low-level constraints removed in relation to emergent work

Top 20 sustainment product expenditure

Table W12.10 and the descriptions that follow provide details of the top 20 sustainment products by forecast expenditure in the Portfolio Additional Estimates Statements 2012-13. Expenditure for the top 20 products represented 63 per cent of total expenditure on Program 1.2 in 2012-13.

Table W12.10 Top 20 sustainment products by expenditure as forecast in the Portfolio Budget Statements 2012-13

Table W12.10 Top 20 sustainment products by expenditure as forecast in the Portfolio Budget Statements 2012-13
  Budget
estimate
2012-13
Revised estimate 2012-13 Actual expenditure 2012-13 Variation Reason for significant variation in product expenditure 2012-13
  $m $m $m $m   
General Manager Joint, Systems and Air          
Aerospace Systems          
Airborne Early Warning & Control(CAF20) 161 138 148 10 The Airborne Early Warning and Control capability and support systems are still maturing. The rate of item repairs and replacements and contractor costs were higher than anticipated.
F/A-18A Hornet Weapons System(CAF02) 153 148 153 5 The primary drivers were proposed savings through an engines contract that were not realised and an unforeseen increase in flying hours.
F/A-18F Block II Super Hornet Weapons System(CAF21) 111 103 99 -4 The deferral of the Tactical Operational Flight Trainer to 2012-13 plus contractor delay in the delivery of modification kits resulted in an underspend.
P-3C/AP-3C Orion Weapons System(CAF04) 105 118 121 3 Increases in hydraulic and avionics repair, rising rates and earlier-than-estimated maintenance costs contributed to this overspend.
C-130J-30 Weapons System(CAF06) 81 81 80 -1 Contractor delays in delivery of spares and savings in contractor maintenance costs.
Lead-in Fighter Hawk 127 Weapons System (CAF03) 73 56 55 -1 Program to remediate an engine defect, which resulted in a reduction in flying hours.
Electronic Systems          
Wide Area Surveillance Capability(CAF13) 83 80 84 4 A Priority Industry Capability health check found the health of this product to be unsatisfactory in the short term. This is due to the impact on industry of an expected five-year gap between the completion of work under Project JP 2025 Phase 5 and the approval of further work under Phase 6. To address this issue, the Government invested nearly $70m in order to retain skill sets and fill the gap between completion of Phase 5 and start-up of Phase 6. The 2012-13 share of this investment was $4m.
Helicopter Systems          
Armed Reconnaissance Helicopter Weapons System(CA12) 96 86 89 3 Accelerated delivery of spares.
Multi Role Helicopter(CA48) 93 88 88 0 Nil variation.
S70A-9 Black Hawk Weapons System (CA11) 86 85 87 2 Actual labour price indices applied to several major contracts were greater than had been expected.
S70B-2 Seahawk Weapons System(CN03) 62 63 64 1 The price for technical services and spare parts amortised via Foreign Military Sales arrangements were slightly higher than forecast.
General Manager Land and Maritime          
Land Systems          
General Service B Vehicle Fleet(CA45) 66 80 66 -14 The 2012-13 revised estimate included amounts for discrete activities, such as the Up-Armouring of Sports Utility Vehicles, management of enhanced equipment pools and re-certification of vehicle mounted cranes. Changing delivery requirements and reduced demand on operational spending resulted in an underspend.
ADF Clothing(CA39) 56 46 37 -9 The reduction in expenditure was a result of reduced consumption both on operations and in the Raise, Train, Sustain environment.
Maritime Systems          
Fuels and Lubricants-Navy, Army, Air Force(CN26, CA43, CAF18) 412 390 388 -2 Reduced fuel requirements for the Army and Navy, partially offset by an increased requirement for the Air Force and fuel price variations.
Anzac Class Frigate(CN02) 206 215 227 12 The Navy-approved additional sustainment work prior to Project SEA 1448 Anti Ship Missile Defence, additional costs for HMAS Stuart coming out of a non-operational condition and urgent defects.
Adelaide Class Frigate (CN01) 139 125 126 1 Navy-approved increase in work for HMAS Darwin.
Auxiliary Oiler Replenishment(CN13) 91 73 68 -5 Schedule delay.
Mine Hunter Coastal(CN14) 61 60 60 0 Nil variation.
Explosive Ordnance          
Explosive Ordnance-Navy, Army, Air Force(CA59, CA60, CAF17, CN37, CN38) 323 296 296 0 Nil variation.
General Manager Submarines          
Collins          
Collins Class Submarines(CN10) 516 501 507 6 Unforeseen inventory shortfall and obsolescence issues.
Total top 20 sustainment products 2,974 2,832 2,843 11  
Other approved sustainment products 1,268 1,367 1,291 -76  
Total sustainment products 4,242 4,199 4,134 -65  
Support to operations 359 391 351 -40  
Total sustainment and operations 4,601 4,590 4,485 -105